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Confidence in the Secretary of State for Transport

Part of the debate – in the House of Commons at 2:26 pm on 19th June 2018.

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Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy) 2:26 pm, 19th June 2018

That misses the point. The German state railway company can bid for its own work in Germany. The whole point is that the UK Government refuse point blank to allow UK companies to bid for the franchises.

As I have said time and again, when it comes to the merits of privatisation and franchising, the Transport Secretary wrongly connects cause and effect. He has always played up the increase in investment in the railways since privatisation, along with the subsequent increase in passenger numbers, as if all that had happened magically just because of the sell-off and break-up of British Rail.

We know that British Rail had been struggling and had poor rolling stock, and that much of it was outdated, but that was because of the constraints imposed on British Rail by the UK Government, who did not allow any borrowing or investment. Once the Major Government had sold it off, the franchising allowed private borrowing to be levered in—borrowing that could be recovered only through fares or a Government subsidy. The fact that the current Secretary still does not acknowledge that shows a lack of understanding or an ideological blind spot. The fact is that the original sell-off was the private finance initiative on tracks, and that remains the case to this day.

Another myth, which we have already heard today, is that somehow the taxpayer pays no money to the franchises. According to the recent library briefing on rail franchises, all but two received Government subsidies in 2016-17, amounting to £2,330 million in that year alone.

A further indication of the failure of the franchise system to which the Secretary of State still adheres is the fact that by 2020, 12 of 16 franchise allocations will be direct awards. Where are the innovation and competition when three quarters of the franchises are direct awards to the companies themselves?

The Secretary of State’s blinkered attitude also permeates the failed East Coast franchise. He more or less shrugs his shoulders and says “Stuff happens: some franchises fail.” The reality is that private investors and companies either make money or they walk away. It has been argued there has not been a £2 billion bail-out of Virgin Trains East Coast, but the fact is that VTEC has walked away with a £2 billion IOU to the Government in its back pocket. It has not had to pay the money back, so if the Government do not want to call that a bail-out, it must be called a write-off. The Government have not tried to chase up the money, and it has not reached the stage of being a bad debt. The Government have simply let VTEC off straight away. I only wish that the Department for Work and Pensions and Her Majesty’s Revenue and Customs would do the same when things go wrong for my constituents. Those bodies are relentless, so why should VTEC walk away owing £2 billion?